Bureau of Prisons
Annual Financial Statement
Fiscal Year 1999
Report No. 00-20
Office of the Inspector General
The Bureau of Prisons (BOP) financial reporting component is comprised of the BOP appropriated activities and the BOP Commissary Trust Fund (Commissary). Prior to fiscal year 1999, the BOP, Commissary and Federal Prisons Industries Inc. (FPI) reported consolidated financial statements as the Federal Prison System. However, in FY 1999 the FPI became a separate reporting entity of the Department of Justice and prepared stand-alone financial statements. Therefore this audit report does not include the FPI financial statements.
The BOP is responsible for overseeing the operations of the federal prisons. Its mission is to protect society by confining offenders in the controlled environments of prisons and community based facilities. The Commissary is a self-sustaining revolving fund that provides inmates with access to products and services not provided by the BOP. At fiscal year-end, the BOP confined 133,689 offenders in 94 federal facilities and contract facilities throughout the United States.
This audit report contains the Annual Financial Statement (AFS) of the BOP for the fiscal year ended September 30, 1999. Cotton and Company, Certified Public Accountants, LLP issued an unqualified opinion on the BOP's FY 1999 financial statements. An unqualified opinion means that the financial statements present fairly, in all material respects, the financial position and results of operations of the entity. Last year Cotton and Company issued a qualified opinion on the FY 1998 financial statements (Office of the Inspector General Report No. 99-22). The quality of BOP's financial reporting improved in fiscal year 1999.
However, the FY 1999 Report on Internal Control includes two reportable conditions. The first reportable condition is that additional quality control steps are necessary regarding year-end accounts payable. This condition was caused by noncompliance with the BOP year-end closing procedures and resulted in undelivered orders being incorrectly recorded as accounts payable and a misstatement of year-end accruals. Appropriate adjustments were made at year-end to correct these errors. The second reportable condition relates to a lack of sufficient security controls over the BOP's accounting system, the Financial Management Information System (FMIS). Since BOP is only an end-user of the FMIS, there are no recommendations for BOP management. This condition will be addressed in the Offices, Boards and Division FY 1999 AFS report and the recommendation will be directed to the Justice Management Division, which developed and maintains the system.
Similar to the prior year, BOP's AFS consists of a balance sheet, statement of net cost, statement of changes in net position, statement of budgetary resources, and statement of financing. Comparative financial statements are not required until FY 2000 and are therefore not presented.